What exactly is wrong with renewables, and why aren’t we all-green already? Subsidy abuse and insufficient economic viability in the face of cheap oil are two of the most common criticisms thrown at the renewable industry.
These, however, are nothing compared to the biggest challenge that the green energy industry has encountered: the impossibility to store power produced—at least not in an affordable and reliable enough way.
This is about to change as a growing number of companies – from leading utilities such as E.ON and GE to startups like California-based Stem – are working on developing cheaper energy storage solutions aimed at eliminating a challenge that’s been putting a spoke in the wheels of renewable energy for decades.
Sensing which way the winds are blowing, some utilities and energy industry majors have not wasted time entering this promising segment. Total bought into Stem last year and acquired French energy storage systems maker Saft. Earlier this month, GE announced the acquisition of a stake in Germany’s Sonnen, a successful peer of Saft.
This M&A activity is paralleled by a flurry of studies and surveys, all pointing to the game-changing potential of energy storage solutions. Bloomberg’s latest New Energy Outlook, for example, notes that the constantly declining cost of lithium-ion batteries, thanks to the rise of electric vehicles, will play a leading role for the wider adoption of renewable energy solutions. Related: How Far From An Electric World Are We?
Then there is this survey by Navigant Research, which has projected that by 2025, the overall size of installed energy storage systems (ESS) will reach 21.6 GW, from 1.1 GW this year. That’s a huge increase—driven mainly by the Asia-Pacific. Navigant Research explains that ESS and renewable energy adoption are reinforcing demand for one another: the more renewable energy is being produced, the greater the need for reliable ESS, and the more widely available these ESS, the greater the demand for renewable energy becomes.
Another study, from the MIT, has looked into the various types of ESSs and has found that regardless of type, they make for a good investment right now. Lead author Jessika Trancik notes that prices still have further to fall to boost ESS attractiveness, but they are already offering a reasonable level of profitability. Related: Oil Refining Capacity Set To Surge, But Can It Boost Oil Prices?
Finally, S&P has published a report recognizing the importance of energy storage systems for the future adoption of renewable energy across the world, in keeping with a target for an overall 45 percent share of renewables in the energy mix by 2030. The report notes that ESS capacity must reach 150 GW by that year if the adoption target is to be achieved.
Meanwhile, in Big Oil, Shell has tentatively recognized the need for diversification into renewables. CEO Ben van Beurden has cautioned investors that this diversification will have to be done slowly to avoid hurting profits, while Exxon and Chevron have bluntly refused to acknowledge the importance of climate change and the necessity to take action to counter it. Oil and gas may be “here to stay” but, apparently, not indefinitely, however unappealing this prospect may be for John Watson and Rex Tillerson.
By Irina Slav for Oilprice.com
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